Many people retire earlier than planned, often struggling to find affordable health insurance before Medicare eligibility at 65. Fortunately, various health plans can help bridge this gap.
When your spouse turns 65 and enrolls in Medicare, their employer-sponsored plan may change, affecting your coverage. Many plans designate Medicare as the primary payer, potentially altering benefits for both the Medicare recipient and their dependents.
Challenges for the “Almost Medicare Eligible” or Early Retirees (Ages 62–65)
- Rising Costs: Health insurance premiums increase with age, sometimes tripling compared to younger adults.
- Preexisting Conditions: ACA-compliant plans must accept all applicants, but some non-compliant plans may charge more or deny coverage.
- Doctor Transitions: Changing plans yearly for better rates may require switching doctors, complicating continuity of care.
Managing Medical Costs Before Medicare
Regular checkups help identify health concerns early, even before Medicare. Since Original Medicare (Parts A and B) doesn’t cover vision, dental, hearing aids, or most prescriptions, maximize any existing workplace benefits before turning 65.
Medicare Advantage plans, offered by private insurers, combine Medicare Parts A and B—plus prescription drug coverage—into one plan, often for around $30/month.
Planning ensures a smooth transition into Medicare, providing reliable coverage for major medical expenses from day one. Start researching early to make informed decisions about your health needs.
Pre-Medicare or Early Retirement Health Insurance Options
Employer Insurance (Part-Time Work)
Short of jumping onto your spouse’s or partner’s employer health plan or awaiting Medicaid eligibility, you could seek a part-time position at a company that offers health insurance coverage options. If you can find such a company, you could be fortunate enough to land a relatively low-stress job with decent health insurance to boot.
Short-Term Plans
Short-term medical (STM) insurance provides temporary coverage for three months with a one-month extension per insurance carrier, offering a quick and affordable option for those between plans. While not required to follow the Affordable Care Act mandate, these policies may include a preventive care office visit, doctor and urgent care copays, free telemedicine, and prescription discounts based on plan selection. Most coverage offers an all-access provider network, with select plans featuring PPO coverage.
With Pivot Health, STM plans can be available for up to 12 months when selecting multiple carrier coverage, subject to state regulations.
See how early retirees utilize STM plans before 65.
COBRA or Early Retirement Plans from Your Old Employer
COBRA (Consolidated Omnibus Budget Reconciliation Act) provides a temporary health insurance option for employees, spouses, and dependents who lose their employer-sponsored coverage due to job loss, reduced hours, or other qualifying events. It allows individuals to keep the same health plan for up to 18 months, but they must pay the full premium, including what their employer previously covered, plus a 2% administrative fee.
- Employers must send a COBRA election notice within 14 days of a qualifying event, and individuals have 60 days to opt in and 45 days to make their first payment.
- While COBRA ensures continuity of care, its high costs can be a burden, making it important to explore other options like ACA Marketplace plans.
- Those losing employer-based insurance can switch to a Marketplace plan during Open Enrollment or qualify for a Special Enrollment Period under certain conditions.
HSA Spenddown
If you’ve accumulated funds in a health savings account (HSA), you’ll want to start spending on care before you join Medicare, especially on dental or vision care not covered by Original Medicare.
Although you don’t lose HSA funds once you reach Medicare age, it’s illegal to continue to contribute to an HSA account once you enroll in Part A or Part B, or if you join for social security benefits. The only exception to continue with your HSA account is to postpone your Medicare effective date. You can do that without penalty, but only until your retirement.
HSAs are often coupled with high-deductible health plans. However, HSAs can be compatible with other types of health insurance. For instance, you could have a low-deductible ACA plan or a short-term plan, and spend your HSA on the standard plans’ copayments. You can also use HSA funds for medical expenses that aren’t generally covered like over-the-counter medications.
Next Steps
For relatively healthy people, health insurance prior to Medicare can turn out to be a little-used safety net, giving you peace of mind, until your robust Medicare benefits kick in. Once on Medicare, you then have dependable health coverage for any big bills from day one.
You’ll want to plan ahead. It’s a good idea to read about Medicare well before your 65th birthday. Once you understand your options, you’ll be in a better position to size up your health needs and decide what to treat immediately and what to safely postpone until you join Medicare.
